“Everybody knew three years ago that Brickell was going to be overbuilt and downtown was going to be overbuilt with condos.” — Economist Laura Kozloski Hart, visiting associate professor of international business and strategy at Barry University

Miami

Three of the county’s biggest industries — tourism, financial services and real estate — have been hit hard and are unlikely to recover this year, and unemployment is up — now 6.8% — and rising.

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“I don’t think 2009 is going to be a whole lot better than we have it now,” says economist Laura Kozloski Hart, a visiting associate professor of international business and strategy at Barry University. “Miami-Dade’s economy is pretty much dependent on services: Tourism, financial services, healthcare and trade services.” With the exception of healthcare, all have declined this year.

Unemployment could reach as high as 10% this year but shouldn’t rise much higher, Kozloski Hart predicts.

While the recession has been widespread, most agree that it started with the real estate boom. “Everybody knew three years ago that Brickell was going to be overbuilt and downtown was going to be overbuilt with condos,” Kozloski Hart says.

More than 56,600 mortgage foreclosures were filed in the county in 2008, according to the Clerk of Courts’ website. This January saw 6,042 filings, more than in any single month last year. Industry experts expect those numbers to rise and property values to fall for at least the first half of this year. But, “sales have generally started to increase from their lows, mostly due to the greater affordability and decreased pricing,” says Adam Cappel, president of CondoReports.com, which tracks detailed data for individual condominium buildings and units.

Economist Laura Kozloski Hart recommends a tax holiday for companies that have had mass layoffs but agree to rehire their employees and guarantee them jobs for two years. [Photo: Brian Smith]

As of the end of last year, 356 of the Miami-Dade residential condo buildings in CondoReports.com’s database were down 50% or more from their peak per-square-foot value. On the other hand, 7% of the buildings in its database actually increased in value during 2008. “Certain neighborhoods and certain buildings are going to stabilize and experience appreciation much faster than others,” Cappel says.

While real estate was the first sector to slump, tourism — the county’s top industry —was perhaps the last. December occupancy was down 8.5% from a year earlier, and room rates fell 6.6%. Both occupancy and room rates are likely to decline further as both leisure and business travel continue to fall. And, although the county’s visitor numbers have often been buffered from declines because of its international appeal, “I think the fact that this recession is global is going to hit at tourism,” Kozloski Hart says. Additionally, while some middle-tier hotels are holding steady, the “AIG affect” has companies canceling meetings and events at high-end properties, says hospitality consultant Scott Brush of Brush & Co.

Who's Hiring

» Baptist Health South Florida and Jackson Health System are both hiring nurses. In addition, Jackson is hiring physicians and other medical and research personnel.

» The University of Miami is hiring researchers at its Miller School of Medicine, scientists at its Institute for Human Genomics, security officers and a few other positions.

» Burger King Corp. is hiring in everything from finance to IT and operations at its corporate headquarters.

» IKON Office Solutions is filling a handful of sales and technician positions.

» Kraft Foods Latin America is hiring several financial and business development analysts.

» Star Casualty Insurance Co. is hiring in positions from clerical to technical.

» Terremark Worldwide is hiring mostly IT people to meet growing demand from its customers.

» UPS is hiring mostly part-time loading and sorting positions. “For the most part, UPS never really stops hiring,” says a company spokesperson.

The high end — which saw the most new rooms over the past few years — also has around 1,000 additional rooms in its inventory this year with the post-renovation reopenings of Miami Beach’s Fontainebleau and Eden Roc hotels. Those new rooms, on top of an overall 3% to 4% drop in demand, will push down occupancy rates further, Brush says. He predicts revenue per hotel room will drop between 9% and 12% this year.

Recovery may start in 2010, he adds, but will begin with midmarket hotels — something sorely lacking in Miami Beach now.

There are a couple of bright spots in the county’s economy: Healthcare, where some hiring is still occurring, and international trade, which is buoyed by Latin America’s relative stability.

To build on those bright spots and speed a turnaround, Kozloski Hart recommends a novel economic stimulus: A tax holiday for companies that have had mass layoffs but agree to rehire their employees and guarantee them jobs for two years. That would keep people spending money, cut government outlays for unemployment compensation and guarantee that those people could pay their mortgages.

Corporate tax revenue contributed only 12% of government revenue last year, she says, so “it would be such a small price to pay and this is direct. It’s immediate. People feel confident.”

People to Watch

South Florida developer Jorge Perez has teamed up with a private equity firm to buy up bargain condos in bulk. [Photo: Rodrigo Varela]

» Three new office towers will open in Miami in 2010, adding some 20% more office space to the market. Developer Loretta Cockrum, chairwoman and CEO of Foram Group, made sure her Brickell Financial Centre got U.S. Green Building Council LEED (Leadership in Energy and Environmental Design) Silver precertification.

» City Mayor Manny Diaz, president of the U.S. Conference of Mayors, has been lobbying in Washington for money to fund urban projects and has the Obama administration’s ear. Term limits will force him out of office in November, and any potential successor with his endorsement becomes an automatic front-runner.

Businesses to Watch

» A new 10-year agreement with Norwegian Cruise Line guarantees the Port of Miami at least $98 million in port fees in exchange for priority access to two large-ship berths and $10 million in upgrades for cruise ship terminals to be completed over the next year to 18 months. NCL will sail its largest “freestyle cruising” ship, Norwegian Epic, from the port starting in 2010.

» Miami’s multinational companies will be the tugboats pulling it out of recession, and FedEx — with 1,500 employees at its Latin American and Caribbean headquarters here — is one of the largest.

Miami-Dade County

People to Watch

» Aviation Director Jose Abreu will try to keep passenger and cargo levels at Miami International Airport steady while supervising the continuing expansion of the county’s top economic engine, which has a $25-billion annual economic impact.

» South Florida “condo king” Jorge Perez has so far kept his Related Group on steady footing, but new luxury-level projects just being completed could be tough to close. At the same time, he and a private equity firm have partnered in a $1-billion fund to make bulk condo acquisitions.

Businesses to Watch

» As Jackson Health System, which saw 243,000 Medicaid patients last year, deals with an expected increase in uninsured patients and a possible $20-million budget cut, the hunt for a new CEO continues; the county’s public health system employs 12,000.

» Construction on Miami Beach’s New World Symphony orchestral academy’s $154-million Frank Gehry-designed campus is under way. When it’s complete in 2010, city leaders say it will be the biggest change to the landscape in years.

Monroe County

Monroe County depends mainly on its tourism industry, which will likely see visitor numbers drop 3% to 4% this year after falling in 2008, says hospitality analyst Scott Brush of Brush & Co. Adding to the county’s woes, a state-mandated 2010 deadline to have most of the county hooked up to advanced wastewater treatment systems is projected to cost another $350 million, with much of the cost to be passed onto businesses that cannot afford to pay. The county is hoping for federal stimulus money for the work, and business leaders are looking at ways to diversify the economy with more high-paying jobs. On the positive side, Brush says that with few new hotels or Ritz Carlton-type properties, the county “looks like it’s in pretty decent shape to recover pretty quickly as the recession eases.”

Person to Watch

» The debate over adding a penny to the lodging tax to fund additional marketing is one of many difficult issues Tourist Development Council Director Harold Wheeler will contend with as he looks for ways to sustain the Keys’ main industry, even as visitor numbers and room rates drop.

Businesses to Watch

» Developer Northstar Resort Enterprises has two major projects under way in Key Largo: A “green” 138-suite resort (managed by Kimpton Hotels) scheduled for 2011 completion and a 123-unit workforce housing project scheduled for 2010 completion.

Jobs
MSA	Jan. 2008	Jan. 2009	% Change	Jobless Rate
Miami/ Miami Beach/ Kendall	1,060,600	1,031,200	-2.8%	6.8%

HOMES
Single-family, existing-home sales by Realtors
MSA	Jan. 2009 Sales	1-Year Change	Jan. 2009 Price	1-Year Change
Miami	407	+47%	$208,100	-38%
Source: Florida Association of Realtors

POPULATION TOTALS
2.4% or higher 1.0% - 2.4% 1.0% or less
COUNTY	2009	Average Annual Growth
		2005-2009	Trend
Miami-Dade	2,442,343	0.90
Monroe	73,589	-0.80
Florida	18,898,835	1.60%

POPULATION BY AGE
Years of Age (2009)
County	0-14	15-19	20-39	40-64	65+	Total
Miami-Dade	19.0%	6.9 %	25.9 %	33.3%	14.9%	2,442,343
Monroe	13.4	4.6	18.5	46.4	17.1	73,589
Florida	18.0%	6.3%	25.8%	32.7%	17.2%	18,898,835

PER CAPITA INCOME
COUNTY	Per Capita Income 2009	Source of Income
		Labor	Property	Transfer
Miami-Dade	$37,370	74.3%	15.9%	9.8%
Monroe	59,672	52.5	43.2	4.2
Florida	$40,331	67.6%	23.6%	8.8%